The People Bulletin
New agency worker regulations could cost £1.3billion per year
15 September 2011
With the new agency worker rules due to come in to force on 1st October, a new report has warned that the regulations could cost businesses over £1billion per year.
With the new agency worker regulations coming into force from the 1st October[1] a new report[2] has revealed that up to 500,000 temporary employment contracts could be under threat as 33% of medium to large UK businesses plan to terminate temporary contracts before the 12-week qualifying period.
As of the 1st October, after 12-weeks agency workers will qualify for equal treatment to permanent employees – including equal pay and benefits. The report estimates that this change could cost businesses £1.3billion per year.
Commenting on the report, Stefan Martin, employment partner at Allen & Overy said, “The advantages of using a flexible workforce during the current economic climate will be compromised as employers feel the burden of additional rules and regulations. While businesses will undoubtedly continue to use agency workers, this will result in increased costs. Rather than strengthening their rights, this may actually make the position of agency workers much more uncertain, exposing them to early termination of contracts”.
Further difficulties
The regulations will also result in further red tape for businesses, requiring them to provide a whole host of information to agencies to determine what level of pay and which benefits the workers should receive after completion of the 12-week qualifying period.
The research also showed that a third of all respondents have yet to consider the issue of pensions auto-enrolment in relation to agency workers and of the 57% of companies that offered performance related bonuses 37% of employers have not yet decided how to appraise temporary workers once the new regulations are implemented.
Martin added, “Users of agency workers need to assess how they are going to manage their temporary workforce going forward and should review their contracts with agencies to minimise the scope for agencies to simply pass on increased costs to business”.
www.allenovery.com
[1] Agency Workers Regulations
[2] www.allenovery.com
See also: ‘Agency Workers Regulations: Are you prepared’ by Lee Stephens in The People Bulletin, 4 August 2011